Quantifying the Value of Lead Nurturing: A Case Study

Most marketing and sales leaders in the business-to-business world know that nurturing leads is important. The reason: it’s essential to maintain a digital connection with buyers who want to learn about a business pain, product, or service—but who are not yet interested in talking to a sales person. Buyers today often use the Internet to research products and vendors long before they’re prepared to make a purchase. This kind of buyer isn’t ready to be handed over to a senior sales executive and should instead be nurtured, or so common wisdom dictates.

But can the sales impact of nurturing be quantified? In this article, we look at a case study of lead nurturing that finds that nurtured leads were three times more likely to convert to sales-accepted leads than traditional marketing-qualified leads.

The Fallacy of the Linear Buying Process

Most marketing and sales leaders in the business-to-business world know that customers now direct the buying process. Previously, sales representatives controlled what prospects could learn, when, and from whom. Today, prospects anonymously use the Internet to research products and vendors before engaging with sales. The amount of research they conduct, the resources they use, and the pace of that research vary significantly from buyer to buyer.

So why do sales and marketing departments still work together in a linear fashion? Why are leads still qualified by marketing, handed to sales, and rarely handed back to marketing for nurturing if they aren’t ready to purchase?

Unfortunately, sales reps with high quotas are under significant pressure to close deals—and this pressure often causes them to enter the picture before the lead is sales-ready. The result of this preemptive engagement is one of two possibilities:

  1. The prospect feels bombarded and ends the conversation, or
  2. The sales rep rejects the lead altogether.

Either way, prospects who showed promise by engaging with marketing are lost, simply because they weren’t ready to make a purchase. The linear track of anonymous to marketing-qualified lead (MQL) to sales-accepted lead (SAL) to win or loss does not conform to the reality of the way BtoB purchasers shop and buy. Worse, it fuels the marketing-sales conflict that already exists at many organizations.

Testing the Effectiveness of Lead Nurturing

To examine the effectiveness of lead warming more closely, Sales Engine performed a study on one of its clients. Sales Engine built a library of multimedia content for this client and used email marketing, social media, search engine optimization (SEO) and ad retargeting to promote it to the 18,000 lead records in the client’s database.

Sales Engine also directed a small team of business development reps (BDRs) to follow up on all types of leads to measure and compare the conversion rates of cold leads, newly generated MQLs, and warm MQLs that had been nurtured over time. The results were striking.

Findings

The BDRs called these 18,000 leads and over two months and had live phone conversations with 1,216 of them. The objective was to set an appointment with an outside sales rep, at which point the MQL would become an SAL. Here is what they found:

  • MQL3s—leads that met the ideal prospect profile (IPP) but had minimal digital engagement—were 124% more likely to convert into an SAL than a cold suspect.
  • MQL2s—leads that met the IPP and clicked through on at least one email offer or downloaded one piece of content—were 321% more likely to convert into SALs than cold suspects.
  • MQL1s—leads that met the IPP and engaged over a longer period of time, clicked through on multiple email offers or several website visits, or consumed content multiple times through continued nurturing—were an astounding 878% more likely to convert into an appointment than cold suspects.
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While this data clearly articulates the value of nurturing leads, it begs for a different sales and marketing paradigm. Expensive enterprise sales reps with high quotas can’t afford to follow up on MQLs when even the best MQLs only convert to appointments at a rate of 5 percent. This difficulty is compounded by the fact that making first contact with an MQL1 may require 5-10 attempts—that translates to 500 to 1,000 attempts for every 100 MQLs.

This new reality calls for the BDR model. The BDR acts as a middle reliever who can have meaningful business conversations with prospects until they are ready to meet with the enterprise rep. The BDR can recommend nurturing content and help position the seller as a valuable resource so that when the lead does reach sales-readiness, the seller is the first company that comes to mind.

Lessons Learned

In the case of this client, nurtured leads converted nearly nine times better than cold leads. Even more importantly, these nurtured leads were three times more likely to convert to SALs than traditional marketing-qualified leads. This begs for ongoing lead nurturing by marketing, and mid-stage intervention by BDRs.

The nurturing approach doesn’t have to be more expensive than the traditional linear approach. BDRs are generally earlier in their careers, and because of the nature of the job, they tend to be less expensive than sales executives. Critically, good BDRs make sales executives much more productive, which means higher quotas.

Over time, the higher conversion rates of the leads nurtured by content and BDRs create a self-funding mechanism that allows companies to invest in more content, more marketing, and more BDRs.

Effective demand generation depends upon engaging with prospects in a way that feels natural to them—a way that doesn’t feel like a hard sell. It involves continually taking the buyer’s pulse, and tweaking the sales and marketing strategy to align with it—even if it means rethinking the entire marketing-sales paradigm.